No, we're not talking about Tony Romo and Jessica Simpson's impending breakup. We're quoting directly from the mustachioed horse's mouth. The headline my friends, is none other than Daimler CEO Dieter Zetsche (Dr. Z to you and me) discussing why the 1998 "merger of equals" between Mercedes-Benz and Chrysler failed so miserably. To refresh your memory (in case your life is filled with more interesting activities than watching the disintegration of poorly planned global corporations)... Daimler sold Chrysler for billions and billions less than they paid for it to a hedge fund last year. Our favorite David Cross-lookalike CEO was speaking to gathered business leaders at a symposium about "Global Capitalism, Local Values" trying to explain exactly went so badly. He points to the level of cooperation between MB and Chrysler as being "less" than he would have liked. Dr. Z goes on to say that Daimler learned a valuable lesson. "It's fair to say that we overestimated the potential of passing leading-edge technology from Mercedes-Benz to Chrysler. Unlike premium brand customers, American volume brand customers are far too price-sensitive to absorb its cost." To which TTAC says, "Duh!" And of course, know thy brand.User comment: By: mennoWhen the "merge of equals" was announced, a car guy buddy and I were in his garage (ironically, doing yet another repair on his mother's Dodge Shadow) and were apalled by the whole idea. He's lived in Germany, in Stuttgart, and I think had some kind of handle on the arrogance thing that they have over there. His (and my) take was that the resulting company would take the styling of Mercedes (zilch) and the quality control of Chrysler (crap) add to cost cutting (liberal doses) and top with German arrogance, and presto! You have a disaster company with all the worst attributes of both! He also agreed with me that before 10 minutes passed, the Germans would simply take control. We were right.
User comment: By: willbodineFunny how time clouds one's memory. Back when they "merged" the main objectives cited for Daimler were the Jeep brand, excess Stateside plant capacity, and a superior CAD system that Mopar had.
User comment: By: SunnyvaleCAMBZ executives got American-style pay packages and Chrysler executives got free luxury company cars. Seems to have worked out well for the executive team. Customer didn't fair as well as the execs, though. Seems like MBZ vehicles received reduced engineering/durability/quality (at least relative to the competition) with ever-accelerating MBZ prices.
User comment: By: Mj0lnir@ Justin- good point. Once the initial bloom faded they became mid-pack at best. I don't think that's the fault of an expensive second-hand Daimler chassis. Unless, of course, the cost of sliding it under american styling caused the interior cost cutting that really kills those cars. But yeah, they really aren't great sellers are they?
User comment: By: seoultrainhahaha oh man, I can't believe I never made the Dieter Zetsche-Tobias Funke connection before.
User comment: By: Alex RodriguezDaimler only sucked money out of Chrysler during the heady years of the early 2000's and pumped little back in. They eventually reaped what they sowed: a whole lot of nothing.
User comment: By: AKMUnlike premium brand customers, American volume brand customers are far too price-sensitive to absorb its cost." I.e. we can swindle premium brand customers because they have enough money not to care that our option prices are just completely ridiculous. After all, we can charge more for a nav system than the cost of a brand new computer.
User comment: By: CiceroTranslation: Chrysler customers want a Chrysler, not a Mercedes. (Which is why they're Chrysler customers and not Mercedes customers.) For the price of a phone call I could have told this to Dieter. Mercedes Benz would have saved several billion dollars.
User comment: By: Justin Berkowitz@Mj0lnir: Did it work? Neither of those cars sells that well - compare them to say the Chevy Impala. And they had to decontent the 300 and Charger to get their prices down. No side torso airbags available, curtain side airbags were only an option, 4 speed auto transmissions on all but the Hemi engines, cheap interiors... That said they are quite good to drive.
User comment: By: paradigm_shiftSo Dr. Z believes that European volume brand customers are NOT price-sensitive to absorbing unnecessary costs? I'm sure Citroen and Renault would set him straight... And what "leading-edge" technology did MB give to Chrysler? An old model E-series platform for the 300? An old model CLK platform for the Crossfire?
Visit here to subscribe to these commentsUser comment: By: Mj0lnirPassing on less-than-leading-edge technology seems to have worked for the 300/Charger platform. Perhaps we're looking at management failure rather than market forces?
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